- Record quarterly production of 3.4M wmt, revenue of $297M, EBITDA of $66M1 and EPS of $0.03
- Approximately 1.3M wmt of
stockpiled iron ore concentrate inventories accumulated during the
recent forest fires, expected to be gradually sold as rollingstock
capacity increases in the upcoming quarters
MONTRÉAL, July 27,
2023 /CNW/ - (SYDNEY, July 28,
2023) - Champion Iron Limited (TSX: CIA) (ASX: CIA) (OTCQX:
CIAFF) ("Champion" or the "Company") is pleased to announce its
operational and financial results for the 2024 financial year first
quarter ended June 30, 2023.
Conference Call Details
Champion will host a conference call and webcast on
July 28, 2023, at 9:00 AM
(Montréal time) / 11:00 PM (Sydney time) to discuss the results for the
financial first quarter ended June 30, 2023. Call details are
outlined at the end of this press release.
Champion's CEO, Mr. David
Cataford, said: "Our people and partners once again
demonstrated their agility by mitigating the impact of one of
Québec's largest forest fires in recent history on our operations
and sales. Despite such unexpected challenges, with the delivery of
the final mining equipment required to complete the Phase II
ramp-up, we reported record quarterly production of 3.4M wmt, representing over 90% of Bloom Lake's
expanded nameplate capacity. While quarterly financial results were
significantly affected by the severe forest fires, we expect to
benefit from the sales of stockpiled iron ore concentrate in the
coming quarters as we gradually increase our shipping capacity with
the recent delivery of additional rolling stock."
1. Highlights
Sustainability and Health & Safety
- No serious injuries during the quarter and no major
environmental issues reported in the period, or since the
recommissioning of Bloom Lake in 2018; and
- Received the "Sollio Groupe Coopératif – Community Involvement"
award at the prestigious Les Mercuriades 2023 competition organized
by the Federation of Québec Chambers of Commerce, and the
2023 "Community Relations" award from the Québec Mining
Association, recognizing the Company's approach towards developing
relationships with First Nations communities.
Operations and Finance
- Record quarterly production of 3.4 million wmt of high-grade
66.1% Fe concentrate for the three-month period ended June 30, 2023, an increase of 49% and 10%,
compared to the same period last year and the previous quarter,
respectively. The increase in production was attributable to the
strong performance of Phase II since achieving commercial
production in December 2022. Ongoing
optimizations are expected to enable Bloom Lake to reach its
expanded production nameplate capacity of 15 Mtpa in the near
term;
- Quarterly iron ore concentrate sales of 2.6 million dmt for the
three-month period ended June 30,
2023, up 27% from the same period in 2022, but down 17% from
the previous quarter due to the impact of forest fires north of
Sept-Îles, Québec, which caused railway interruptions from
May 30 to June 10, 2023, and reduced
capacity for the remainder of the period;
- Financial results for the three-month period ended June 30, 2023, were negatively impacted by a
lower IODEX 65% Fe CFR China Index ("P65"), compared to the
previous quarter, and the negative provisional pricing adjustments
on volume in transit as at March 31,
2023. Lower than expected shipments in June 2023 as a result of forest fires, combined
with record production during the quarter, increased iron ore
concentrate inventories at Bloom Lake to 1.3 million wmt as at
June 30, 2023. The iron ore
concentrate inventories are expected to be gradually shipped and
sold in the upcoming quarters as the railway returns to normal
capacity and the recently delivered locomotives are
commissioned;
- For the three-month period ended June
30, 2023, the cost of sales was $81.3/dmt1 (US$60.5/dmt)2, compared to
$84.1/dmt1 (US$65.9/dmt)2 for the same period in
2022, positively impacted by increased production and lower fuel
prices and offset by the increase in rail and port costs. Rail
costs were impacted by semi-annual price indexations based on
trailing fuel prices when prices were higher, while port handling
costs were impacted by fixed costs at the port terminal in
Sept-Îles amortized over fewer shipped tonnes. Cost of sales per
dmt sold for the quarter was slightly higher than the cost of sales
per dmt sold of $79.0/dmt1
(US$58.4/dmt)2 for the
previous quarter, mainly due to the impact of lower
shipments on higher fixed costs for port handling. The Company
expects the remaining Phase II ramp-up inefficiencies, which
negatively impacted operating costs per tonne, to normalize in the
near term as the focus increases on optimizing operations with the
ongoing commissioning of new mining equipment and increases in
throughput. Additionally, the Company expects to benefit from lower
fuel prices in the upcoming rail cost indexation adjustments and a
return to normal shipments as the railway and rolling stock
capacity improves;
- Revenues of $297.2 million for
the three-month period ended June 30,
2023 ($279.3 million for the
same period in 2022), net cash flow from operating activities of
$49.3 million (net cash flow used in
operating activities of $32.2 million
for the same period in 2022), EBITDA of $65.8 million1 ($94.9 million1 for the same period in
2022) and net income of $16.7 million
with EPS of $0.03 ($41.6 million with EPS of $0.08 for the same period in 2022); and
- $250.3 million in cash and cash
equivalents and short-term investments as at June 30, 2023, compared to $187.1 million at the same time in the 2022
calendar year and $327.1 million as
at March 31, 2023. Available
liquidity, including amounts available from the Company's credit
facilities, totalled $579.2
million1 at quarter-end, compared to $673.7 million1 as at March 31, 2023.
Direct Reduction Pellet Feed Project ("DRPF Project") Update
- The DRPF Project remains on schedule for potential completion
by the second half of calendar year 2025, pending a final
investment decision; and
- Initial budgets approved by the Board of Directors enabled the
Company to advance detailed engineering work, order long-lead
equipment and initiate on-site activities during the period, in
preparation for upcoming civil work programs.
Other Growth and Development
- The Company continues to evaluate organic growth opportunities,
including the feasibility study for the Kamistiatusset iron ore
project (the "Kami Project") to produce a Direct Reduction ("DR")
grade pellet feed product, and a study, in collaboration with a
major international steelmaking partner, evaluating the
re-commissioning of the Pointe-Noire Iron Ore Pelletizing Facility
in order to produce DR grade pellets. Both studies are expected to
be completed by the end of 2023.
2. Bloom Lake Mine Operating Activities
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
2022
|
Variance
|
|
|
|
|
|
Operating
Data
|
|
|
|
|
Waste mined and hauled
(wmt)
|
|
5,198,500
|
5,606,000
|
(7 %)
|
Ore mined and hauled
(wmt)
|
|
9,593,500
|
6,193,100
|
55 %
|
Material mined and
hauled (wmt)
|
|
14,792,000
|
11,799,100
|
25 %
|
|
|
|
|
|
Stripping
ratio
|
|
0.54
|
0.91
|
(41 %)
|
|
|
|
|
|
Ore milled
(wmt)
|
|
9,895,600
|
6,022,200
|
64 %
|
Head grade Fe
(%)
|
|
28.8
|
31.0
|
(7 %)
|
Fe recovery
(%)
|
|
78.2
|
80.2
|
(2 %)
|
Product Fe
(%)
|
|
66.1
|
66.1
|
— %
|
Iron ore concentrate
produced (wmt)
|
|
3,397,200
|
2,282,600
|
49 %
|
Iron ore concentrate
sold (dmt)
|
|
2,563,500
|
2,013,900
|
27 %
|
Impact of Forest Fires
Forest fires emerged on May 28,
2023, north of Sept-Îles, Québec, resulting in railway
service interruptions between Bloom Lake and the port of Sept-Îles
between May 30 and June 10, 2023.
There was no damage to Champion's facilities and no significant
damage was identified to the railway following inspections by its
operator. As forest fires subsided in the region, railway services
resumed on June 10, 2023, although at
partial railway capacity for the remainder of the financial period
in the 2023 calendar year. Railway services are expected to return
to normal capacity in the near term, after the completion of
repairs to the damaged electrical poles and wires over several
kilometers.
Despite supply chain challenges caused by multiple highway
closures impacting operations, Bloom Lake operated continuously
throughout the railway interruptions and stockpiled iron ore
concentrate at the mining complex. The Company responded to the
situation by triggering its emergency response plan and managing
supply chain risks by focusing mine operations on critical
activities required to feed the two plants. This impacted the
Company's ability to move waste and generate blasted ore inventory.
The Company also used its crusher's stockpiles to supply the two
plants during that period and suffered from a short power outage
which impacted operations for a day. As at June 30, 2023, the Company had 1.3 million wmt of
iron ore concentrate in inventory at the Bloom Lake site. The
Company expects its stockpiled iron ore concentrate at Bloom Lake
to be shipped and sold over several upcoming quarters with the
railway resuming full capacity and the three additional locomotives
received in June 2023 being currently
in commissioning. The Company expects to incur additional
rehandling costs in future periods to reclaim the iron ore
concentrate from the stockpile.
Phase II Update
Phase II reached commercial production in December 2022 and
the Company continued to make improvements to stabilize and
optimize operations. Phase II produced at nameplate capacity for
thirty consecutive days during the three-month period ended
June 30, 2023. Short-term challenges, including delivery
delays and the commissioning of mining equipment, created
inefficiencies across the site, negatively impacting the plant's
ability to reach its full expanded nameplate capacity in the 2023
financial year. Ongoing work programs continue to optimize and
synchronize operations, and adapt maintenance practices to obtain
the expected reliability required to achieve Bloom Lake's expanded
nameplate capacity on a consistent basis. With the delivery and
assembly of the remaining required mining equipment during the
three-month period ended June 30, 2023, and current work
programs aimed at increasing throughput and ore recoveries, the
path towards Bloom Lake reaching its expanded nameplate capacity of
15 Mtpa in the near term has significantly improved.
Work on third-party infrastructure continued to advance in the
three-month period ended June 30, 2023, further
positioning the Company to benefit from additional flexibility and
capacity to handle the Company's expanded nameplate capacity at the
port facilities in Sept-Îles. The construction and commissioning of
the new stacker reclaimer and associated conveyors should be
completed shortly, which is expected to positively impact the
Company's vessel loading time in the upcoming weeks. Moreover, the
three additional locomotives required to support the expanded
production capacity were delivered in late June 2023 and their commissioning is currently
ongoing. This should enable the Company to increase its shipping
capacity in the near term.
Operational Performance
In the three-month period ended June 30, 2023, 14.8
million tonnes of material were mined and hauled, compared to 11.8
million tonnes during the same period in 2022, an increase of 25%.
This is also a 4% improvement over the volume mined and hauled in
the previous quarter. The increase in material movement can be
attributed to the contribution of recently commissioned new
equipment. The Company intends to see additional benefits from this
new mining equipment in the upcoming months. The stripping ratio
for the period was impacted by forest fires as fuel inventories
were prioritized for critical activities as well as fleet
performance, and was slightly lower than the Company's plan for the
2024 financial year. With reduced mining equipment capacity in the
earlier part of the quarter, the Company, as planned, reduced mined
waste to optimize plant operations in connection with transitional
incremental feed requirements during the Phase II ramp-up period.
The Company intends to gradually increase its stripping ratio in
future periods to recover the waste backlog accumulated during the
2023 financial year.
The plants processed 9.9 million tonnes of ore during the
three-month period ended June 30, 2023, compared to 6.0
million tonnes for the same period in the 2022 calendar year, and
9.1 million tonnes in the previous quarter, representing an
increase of 64% and 9%, respectively. The increase in ore milled
was driven by the progress of the Phase II ramp-up to reach Bloom
Lake's expanded nameplate capacity of 15 Mtpa.
The iron ore head grade for the three-month period ended
June 30, 2023, was 28.8%, compared to 31.0% for the same
period in 2022. The variation in head grade was expected and
attributable to lower-grade ore being sourced and blended from
different pits. This was anticipated and is in line with the mine
plan and the LoM head grade average.
The Company's average Fe recovery rate of 78.2% for the
three-month period ended June 30, 2023, compared to 80.2%
for the same period in 2022, was negatively impacted by the lower
head grade. The Company remains confident in its ability to reach
the average LoM expected Fe recovery rate target of 82.4% in the
near term at Bloom Lake, as detailed in the Phase II feasibility
study.
With higher processed ore partially offsetting lower head grade
and lower recovery, Bloom Lake delivered a record production of 3.4
million wmt of high-grade iron ore concentrate during the
three-month period ended June 30, 2023, an increase of
49%, compared to 2.3 million wmt during the same period in 2022,
and a 10% increase in production compared to the previous quarter.
Management expects to benefit from optimization work programs and
recent equipment additions, which should result in improved
combined production of Bloom Lake's plants in the near term.
3. Financial Performance
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
2022
|
Variance
|
|
|
|
|
|
Financial Data
(in thousands of dollars)
|
|
|
|
|
Revenues
|
|
297,162
|
279,321
|
6 %
|
Cost of
sales
|
|
208,485
|
169,407
|
23 %
|
Other
expenses
|
|
19,645
|
15,605
|
26 %
|
Net finance
costs
|
|
6,926
|
4,190
|
65 %
|
Net income
|
|
16,657
|
41,554
|
(60 %)
|
EBITDA1
|
|
65,805
|
94,930
|
(31 %)
|
|
|
|
|
|
Statistics
(in dollars per dmt sold)
|
|
|
|
|
Gross average realized
selling price1
|
|
168.8
|
190.4
|
(11 %)
|
Net average realized
selling price1
|
|
115.9
|
138.7
|
(16 %)
|
C1 cash
cost1
|
|
81.3
|
74.0
|
10 %
|
AISC1
|
|
94.1
|
93.5
|
1 %
|
Cash operating
margin1
|
|
21.8
|
45.2
|
(52 %)
|
A. Revenues
Revenues totalled $297.2 million
for the three-month period ended June 30, 2023, compared
to $279.3 million for the same period
in 2022, as higher sales volume over the same prior-year period was
more than offset by a lower P65 index price and negative
provisional pricing adjustments. Lower freight and other costs as
well as a weaker Canadian dollar, compared to the same period last
year, and certain sales using backward-looking iron ore index
prices partially mitigated the impact of lower prices.
During the three-month period ended June 30, 2023, 2.6
million tonnes of high-grade iron ore concentrate were sold,
compared to 2.0 million tonnes for the same period in 2022. Sales
volume was up 27% over the prior-year period due to incremental
production driven by Phase II achieving commercial production in
December 2022, but was negatively
impacted by twelve days of railway interruptions from May 30 to June 10, 2023, due to forest fires
in Québec and reduced services capacity for the remainder of the
first quarter of the 2024 financial period.
The gross average realized price was US$125.7/dmt1 during the first quarter
of the 2024 financial year, down from US$149.6/dmt1 for the same period last
year due to lower P65 index prices. During the three-month period
ended June 30, 2023, the P65 index averaged US$124.0/dmt, a decrease of 23% from the same
quarter last year, representing a premium of 11.7% over the IODEX
62% Fe CFR China Index index average price of US$111.0/dmt. Last year, the high-grade premium
over the P62 index averaged 16.2%. Weakening steel mills'
profitability in China led to a
decline in high-grade iron ore premiums for the quarter, compared
to the same period in 2022.
The gross average realized selling price of US$125.7/dmt1 was slightly higher than
the P65 index average price of US$124.0/dmt for the period, due to certain sales
contracts using backward-looking iron ore index prices, when prices
were higher than the P65 index average for the three-month period
ended June 30, 2023. This was partially offset by the 1.4
million tonnes in transit as at June 30, 2023, that were
provisionally priced using an average forward price of US$121.2/dmt, which was lower than the P65 index
average price for the period.
The average C3 Baltic Capesize Index ("C3") for the three-month
period ended June 30, 2023, was US$21.1/t compared to US$30.2/t for the same period in 2022,
representing a decrease of 30%, contributing to lower freight costs
in the three-month period ended June 30, 2023. When
contracting vessels on the spot market, Champion typically books
vessels three to five weeks prior to the desired laycan period due
to its distance from main shipping hubs. Although this creates a
delay between the freight paid and the C3 index, the effect of this
delay is eventually reconciled since Champion ships its high-grade
iron ore concentrate uniformly throughout the year. Additionally,
the Company has multiple freight agreements based on an agreed-upon
premium above the loading month average C3 index to further reduce
price volatility.
Provisional pricing adjustments on previous quarterly sales,
which were impacted by the significant decrease in the P65 index
during the quarter, negatively impacted the net average realized
selling price. During the three-month period ended
June 30, 2023, an average price of US$123.5/dmt was established for the 2.0 million
tonnes of iron ore that were in transit as at
March 31, 2023, and which were previously evaluated using
an average expected price of US$141.1/dmt. Accordingly, during the three-month
period ended June 30, 2023, net negative provisional
pricing adjustments of $46.8 million
(US$34.9 million) were recorded,
representing a negative impact of US$13.6/dmt over the total volume of 2.6 million
dmt sold during the period.
After taking into account sea freight and other costs of
US$25.8/dmt and the negative
provisional pricing adjustment of US$13.6/dmt, the Company obtained a net average
realized selling price of US$86.3/dmt
(C$115.9/dmt)1 for its
high-grade iron ore shipped during the period.
B. Cost of Sales
For the three-month period ended June 30, 2023, the
cost of sales totalled $208.5 million, compared to $169.4 million for the same period in 2022
for a cost of sales per tonne sold of $81.3/dmt1 during the period, compared
to $84.1/dmt1 for the same
period in 2022.
The cost of sales per dmt sold for the three-month period ended
June 30, 2023, was negatively impacted by higher rail and
port costs due to semi-annual price indexations driven by fuel
costs for rail services, the impact of lower shipments during the
quarter to amortize mostly fixed costs at the port facilities in
Sept-Îles, higher maintenance costs driven by the utilization of
contractors to fill vacant positions and longer than expected
shutdowns. The Company also incurred rehandling costs at the mine
site during the period. This was partially mitigated by lower fuel
costs used in mining activities and higher production levels.
Mining and processing costs over the 3.3 million dmt produced in
the three-month period ended June 30, 2023, totalled
$50.3/dmt produced, a decrease of 10%
compared to $55.8/dmt produced in the
fourth quarter of the 2023 financial year, reflecting the positive
impact of increased production volume on the Company's controllable
fixed costs.
Due to the high stockpile levels at the site, attributable to
railway interruptions, the Company expects to incur additional
rehandling costs to reclaim the iron ore concentrate from the
stockpile to the shipment process, which should negatively impact
the cost of sales in future periods.
C. Net Income & EBITDA
For the three-month period ended June 30, 2023, the
Company generated an EBITDA of $65.8 million1, representing an
EBITDA margin of 22%1, compared to $94.9 million1, representing an
EBITDA margin of 34%1, for the same period in 2022.
Lower EBITDA was mainly due to lower net average realized
selling prices, partially offset by higher sales volume and lower
cost of sales per dmt sold.
For the three-month period ended June 30, 2023, the
Company generated net income of $16.7 million (EPS of $0.03), compared to $41.6 million (EPS of $0.08) for the same period last year. The
year-over-year decrease in net income was mainly affected by lower
gross profit, as described above.
D. All In Sustaining Cost and Cash Operating Margin
During the three-month period ended June 30, 2023, the
Company realized an AISC of $94.1/dmt1, compared to $93.5/dmt1 for the same period in
2022. The increase was due to higher C1 cash cost, partially offset
by the positive impact of higher sales volume on G&A expenses
and sustaining capital expenditures. The AISC in the comparative
period was impacted by the capitalization of certain mining costs
on the Company's stripping assets, as well as higher sustaining
capital expenditures related to mining equipment. Refer to section
5 — Cash Flows for details on sustaining capital expenditures.
The Company generated a cash operating margin of $21.8/dmt1 for each tonne of
high-grade iron ore concentrate sold during the three-month period
ended June 30, 2023, compared to $45.2/dmt1 for the same prior-year
period. The variation is mainly due to a lower net average realized
selling price for the period.
4. Exploration Activities
During the three-month period ended June 30, 2023, the
Company maintained all of its properties in good standing and did
not enter into any farm-in/farm-out arrangements. During the
three-month period ended June 30, 2023, $2.7 million in exploration and evaluation
expenditures were incurred, compared to $2.1 million for the same prior-year period.
During the three-month period ended June 30, 2023,
exploration and evaluation expenditures mainly consisted of costs
associated with work related to updating the Kami Project
feasibility study, claim renewal fees and claim staking around the
Kami property.
Details on exploration projects and maps are available on the
Company's website at www.championiron.com under the section
Operations & Projects.
5. Cash Flows — Purchase of Property, Plant and
Equipment
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
Tailings
lifts
|
|
11,946
|
|
8,985
|
Stripping and mining
activities
|
|
3,263
|
|
11,063
|
Mining equipment
rebuild and replacement
|
|
4,552
|
|
6,897
|
Other sustaining
capital expenditures
|
|
42
|
|
—
|
Sustaining capital
expenditures
|
|
19,803
|
|
26,945
|
|
|
|
|
|
DRPF Project
|
|
11,083
|
|
—
|
Other capital
development expenditures at Bloom Lake
|
|
24,784
|
|
95,669
|
Purchase of property,
plant and equipment as per cash flows
|
|
55,670
|
|
122,614
|
Sustaining Capital Expenditures
The increases in tailings-related investments for the
three-month period ended June 30, 2023, were required to
prepare the site for a higher level of operations with Phase II. As
part of the Company's ongoing and thorough tailings
infrastructure monitoring and inspections, the Company continues to
invest in its safe tailings strategy and is implementing its
long-term tailings investment plan.
The decrease in stripping and mining activities during the
three-month period ended June 30, 2023, compared to the
same period in the previous financial year, is attributable to the
low level of waste moved at the mine due to limited mining
equipment availability early in the quarter, until all equipment
was fully commissioned. The stripping and mining activities were
slightly lower than the Company's plan for the 2024 financial year,
due to the prioritization of critical activities to mitigate
impacts of the forest fires.
The decrease in the Company's mining equipment rebuild
program, despite an increase in additional equipment for the
three-month period ended June 30, 2023, is attributable
to Phase II mining equipment delivery delays which forced the
Company to postpone rebuild investments in order to maintain full
mining activities. During the next quarters, the Company should
resume investments in the mining equipment rebuild program, with
all mining equipment commissioned, which is in line with the
Company's fleet management program for the 2024 financial year.
DRPF Project
During the three-month period ended June 30, 2023,
$11.1 million was spent in
capital expenditures related to the DRPF Project. Investments
mainly consisted of on-site preparation activities, engineering
work and equipment purchasing. Cumulative investments of
$12.0 million were deployed on
the DRPF Project as at June 30, 2023.
Other Capital Development Expenditures at Bloom Lake
During the three-month period ended June 30, 2023,
other capital development expenditures at Bloom Lake totalled
$24.8 million, compared to
$95.7 million in the same period
in 2022. During the three-month period ended
June 30, 2023, the expenditures mainly consisted of
$8.4 million in improvements and
conformity of various infrastructure ($2.8
million for the same period last year), including the
construction of two pads to expand the Company's capacity to
stockpile concentrate near the loadout, $8.4
million for the expansion of the garage at the mine to
support an expanded fleet, and $6.6 million in deposits for mining
equipment ($14.8 million for the same
period last year). The expenditures for the first quarter of the
2023 financial year also included $67.8
million related to Phase II and $4.4
million in capitalized borrowing costs.
6. Conference Call and Webcast Information
A webcast and conference call to discuss the foregoing results
will be held on July 28, 2023, at 9:00
AM (Montréal time) / 11:00 PM (Sydney time). Listeners may access a live
webcast of the conference call from the Investors section of the
Company's website at
www.championiron.com/investors/events-presentations or by dialing
toll free +1-888-390-0546 within North
America or +1-800-076-068 from Australia.
An online archive of the webcast will be available by accessing
the Company's website at
www.championiron.com/investors/events-presentations. A telephone
replay will be available for one week after the call by dialing
+1-888-390-0541 within North
America or +1-416-764-8677 overseas, and entering passcode
757974 #.
About Champion Iron Limited
Champion, through its wholly-owned subsidiary Quebec Iron Ore
Inc., owns and operates the Bloom Lake Mining Complex, located on
the south end of the Labrador Trough, approximately 13 km north of
Fermont, Québec. Bloom Lake is an
open-pit operation with two concentrators that primarily source
energy from renewable hydroelectric power. The two concentrators
have a combined nameplate capacity of 15 Mtpa and produce a low
contaminant high-grade 66.2% Fe iron ore concentrate with a proven
ability to produce a 67.5% Fe direct reduction quality concentrate.
In January 2023, the Company
announced the positive findings of a study evaluating upgrading
half of the Bloom Lake mine capacity to a direct reduction quality
pellet feed iron ore and approved an initial budget to advance the
project. Bloom Lake's high-grade and low contaminant iron ore
products have attracted a premium to the Platts IODEX 62% Fe iron
ore benchmark. The Company ships iron ore concentrate from Bloom
Lake by rail, to a ship loading port in Sept-Îles, Québec, and has
sold its iron ore concentrate to customers globally, including in
China, Japan, the Middle
East, Europe, South Korea, India and Canada. In addition to Bloom Lake, Champion
owns a portfolio of exploration and development projects in the
Labrador Trough, including the Kamistiatusset Project, located a
few kilometres south-east of Bloom Lake, and the Consolidated Fire
Lake North iron ore project, located approximately 40 km south of
Bloom Lake.
Cautionary Note Regarding Forward-Looking Statements
This press release includes certain information and statements
that may constitute "forward-looking information" under applicable
Canadian securities laws. Forward-looking statements are statements
that are not historical facts and are generally, but not always,
identified by the use of words such as "plans", "expects", "is
expected", "budget", "scheduled", "estimates", "continues",
"forecasts", "projects", "predicts", "intends", "anticipates",
"aims", "targets" or "believes", or variations of, or the negatives
of, such words and phrases or state that certain actions, events or
results "may", "could", "would", "should", "might" or "will" be
taken, occur or be achieved. Inherent in forward-looking statements
are risks, uncertainties and other factors beyond the Company's
ability to predict or control.
Specific Forward-Looking Statements
All statements, other than statements of historical facts
included in this press release that address future events,
developments or performance that Champion expects to occur are
forward-looking statements. Forward-looking statements include,
among other things, Management's expectations regarding: (i) the
Company's Phase II expansion project, its expected achievement of
nameplate capacity, throughput, recovery rates, economic and other
benefits, impact on nameplate capacity, milestones and associated
costs; (ii) the project to upgrade the Bloom Lake iron ore
concentrate to a higher grade with lower contaminants and to
convert approximately half of Bloom Lake's increased nameplate
capacity of 15 Mtpa to commercially produce a DR quality pellet
feed iron ore, expected project timeline, economics, capital
expenditure, budget and financing; (iii) the study evaluating the
re-commissioning of the Pointe-Noire Iron Ore Pelletizing Facility
to produce DR grade pellets and its anticipated completion
timeline; (iv) the Kami Project's feasibility study, its purpose,
including evaluating the potential to produce a DR grade product,
and anticipated completion timeline; (v) increasing stripping ratio
and recovering accumulated waste backlog; (vi) optimization work
programs and their expected results and impact on production,
throughput and recovery; (vii) third-party infrastructure and its
capacity to handle the Company's expanded nameplate capacity;
(viii) commissioning of recently delivered locomotives and other
equipment and its expected impact on production and the Company's
shipping capacity and other benefits; (ix) shipping and sales of
accumulated concentrate inventories and related rehandling costs
and their impact on cost of sales and revenues; * return of the
railway to normal capacity following damage caused by forest fires;
(xi) expected lower fuel prices; (xii) the Company's mining
equipment rebuild program and related investments; (xiii) the
impact of iron ore prices fluctuations on the Company and its
financial results and the occurrence of certain events and their
impact on iron ore prices and demand for high-grade iron ore
products; (xiv) production and recovery rate targets and the
Company's performance; (xv) pricing of the Company's
products; and (xvi) the Company's growth and opportunities
generally.
Risks
Although Champion believes the expectations expressed in such
forward-looking statements are based on reasonable assumptions,
such forward-looking statements involve known and unknown risks,
uncertainties and other factors, most of which are beyond the
control of the Company, which may cause the Company's actual
results, performance or achievements to differ materially from
those expressed or implied by such forward-looking statements.
Factors that could cause the actual results to differ materially
from those expressed in forward-looking statements include, without
limitation: (i) the results of feasibility studies; (ii) changes in
the assumptions used to prepare feasibility studies; (iii) project
delays; (iv) timing and uncertainty of industry shift to green
steel and Electric Arc Furnaces; (v) continued availability of
capital and financing and general economic, market or business
conditions; (vi) general economic, competitive, political and
social uncertainties; (vii) future prices of iron ore; (viii)
future transportation costs; (ix) failure of plant, equipment or
processes to operate as anticipated; * delays in obtaining
governmental approvals, necessary permitting or in the completion
of development or construction activities; and (xi) the effects of
catastrophes and public health crises, including the impact of
COVID-19 on the global economy, the iron ore market and Champion's
operations, as well as those factors discussed in the section
entitled "Risk Factors" of the Company's 2023 Annual Report, Annual
Information Form and MD&A for the financial year ended
March 31, 2023, which are available
on SEDAR+ at www.sedarplus.ca, the ASX at www.asx.com.au and the
Company's website at www.championiron.com. There can be no
assurance that such information will prove to be accurate as actual
results and future events could differ materially from those
anticipated in such forward-looking information. Accordingly,
readers should not place undue reliance on forward-looking
information.
Additional Updates
All of Champion's forward-looking information contained in this
press release is given as of the date hereof or such other date or
dates specified in these forward-looking statements and is based
upon the opinions and estimates of Champion's Management and
information available to Management as at the date hereof. Champion
disclaims any intention or obligation to update or revise any of
the forward-looking information, whether as a result of new
information, future events or otherwise, except as required by law.
If the Company does update one or more forward-looking statements,
no inference should be drawn that it will make additional updates
with respect to those or other forward-looking statements. Champion
cautions that the foregoing list of risks and uncertainties is not
exhaustive. Readers should carefully consider the above factors as
well as the uncertainties they represent and the risks they
entail.
Abbreviations
Unless otherwise specified, all dollar figures stated herein are
expressed in millions of Canadian dollars, except for: (i) tabular
amounts which are in thousands of Canadian dollars; and (ii) per
share or per tonne amounts. The following abbreviations and
definitions are used throughout this press release: US$
(United States dollar), C$
(Canadian dollar), Fe (iron ore), wmt (wet metric tonnes), dmt (dry
metric tonnes), Mtpa (million tonnes per annum), M (million), km
(kilometers), LoM (life of mine), G&A (general and
administrative), EBITDA (earnings before interest, tax,
depreciation and amortization), AISC (all-in sustaining cost), EPS
(earnings per share), Management (Champion's management team),
Bloom Lake or Bloom Lake Mine (Bloom Lake Mining Complex) and Phase
II (Phase II expansion project). The utilization of "Champion" or
the "Company" refers to Champion Iron Limited and/or one, or more,
or all of its subsidiaries, as applicable. "IFRS" refers to
International Financial Reporting Standards.
For additional information on Champion Iron Limited, please
visit our website at: www.championiron.com.
This document has been authorized for release to the market by
the CEO of Champion Iron Limited, David
Cataford.
The Company's unaudited Condensed Consolidated Financial
Statements for the three-month period ended June 30, 2023
(the "Financial Statements") and associated Management's Discussion
and Analysis ("MD&A") are available under the Company's profile
on SEDAR+ (www.sedarplus.ca), on the ASX (www.asx.com.au) and
the Company's website (www.championiron.com).
_____________________________________
|
1 This is a
non-IFRS financial measure, ratio or other financial measure. The
measure is not a standardized financial measure under the financial
reporting framework used to prepare the financial statements and
might not be comparable to similar financial measures used by other
issuers. Refer to the section below — Non-IFRS and Other Financial
Measures for definitions of these metrics and reconciliations to
the most comparable IFRS measure when applicable. Additional
details for these non-IFRS and other financial measures, have been
incorporated by reference and can be found in section 20 of the
Company's MD&A for the three-month period ended
June 30, 2023, available on SEDAR+ at www.sedarplus.ca,
the ASX at www.asx.com.au and on the Company's website under the
Investors section at www.championiron.com.
|
2 See the
"Currency" section of the MD&A for the three-month period ended
June 30, 2023, included in note 6 — Key Drivers,
available on SEDAR+ at www.sedarplus.ca, the ASX at www.asx.com.au
and on the Company's website under the Investors section at
www.championiron.com.
|
Non-IFRS and Other Financial Measures
The Company has included certain non-IFRS financial measures,
ratios and supplementary financial measures in this press release,
as listed in the table below, to provide investors with additional
information in order to help them evaluate the underlying
performance of the Company. These measures are mainly derived from
the Financial Statements but do not have any standardized meaning
prescribed by IFRS and, therefore, may not be comparable to similar
measures presented by other companies. Management believes that
these measures, in addition to conventional measures prepared in
accordance with IFRS, provide investors with an improved ability to
understand the results of the Company's operations. Non-IFRS and
other financial measures should not be considered in isolation or
as substitutes for measures of performance prepared in accordance
with IFRS. The exclusion of certain items from non-IFRS financial
measures does not imply that these items are necessarily
non-recurring.
EBITDA and EBITDA Margin
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
(in thousands of
dollars)
|
|
|
|
|
Income before income
and mining taxes
|
|
28,966
|
|
70,948
|
Net finance
costs
|
|
6,926
|
|
4,190
|
Depreciation
|
|
29,913
|
|
19,792
|
EBITDA
|
|
65,805
|
|
94,930
|
Revenues
|
|
297,162
|
|
279,321
|
EBITDA
margin
|
|
22 %
|
|
34 %
|
Available Liquidity
|
|
As at
June 30,
|
|
As at March
31,
|
|
|
2023
|
|
2023
|
|
|
|
|
|
Cash and cash
equivalents
|
|
250,340
|
|
326,806
|
Short-term
investments
|
|
—
|
|
312
|
Undrawn amounts under
credit facilities
|
|
328,835
|
|
346,596
|
Available
liquidity
|
|
579,175
|
|
673,714
|
C1 Cash Cost
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
2,563,500
|
|
2,013,900
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Cost of
sales
|
|
208,485
|
|
169,407
|
Less: Incremental costs
related to COVID-19
|
|
—
|
|
(840)
|
Less: Bloom Lake Phase
II start-up costs
|
|
—
|
|
(19,476)
|
|
|
208,485
|
|
149,091
|
|
|
|
|
|
C1 cash cost (per dmt
sold)
|
|
81.3
|
|
74.0
|
All-In Sustaining Cost
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
2,563,500
|
|
2,013,900
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Cost of
sales
|
|
208,485
|
|
169,407
|
Less: Incremental costs
related to COVID-19
|
|
—
|
|
(840)
|
Less: Bloom Lake Phase
II start-up costs
|
|
—
|
|
(19,476)
|
Sustaining capital
expenditures
|
|
19,803
|
|
26,945
|
G&A
expenses
|
|
12,949
|
|
12,272
|
|
|
241,237
|
|
188,308
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
94.1
|
|
93.5
|
Cash Operating Margin and Cash Profit Margin
|
|
Three Months
Ended
|
|
|
June 30,
|
|
|
2023
|
|
2022
|
|
|
|
|
|
Per tonne
sold
|
|
|
|
|
Iron ore concentrate
sold (dmt)
|
|
2,563,500
|
|
2,013,900
|
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
|
Revenues
|
|
297,162
|
|
279,321
|
Net average realized
selling price (per dmt sold)
|
|
115.9
|
|
138.7
|
|
|
|
|
|
AISC (per dmt
sold)
|
|
94.1
|
|
93.5
|
Cash operating margin
(per dmt sold)
|
|
21.8
|
|
45.2
|
Cash profit
margin
|
|
19 %
|
|
33 %
|
Gross Average Realized Selling Price per dmt Sold
|
Three Months
Ended
|
|
June 30,
|
|
2023
|
|
2022
|
Per tonne
sold
|
|
|
|
Iron ore concentrate
sold (dmt)
|
2,563,500
|
|
2,013,900
|
|
|
|
|
(in thousands of
dollars except per tonne)
|
|
|
|
Revenues
|
297,162
|
|
279,321
|
Provisional pricing
adjustments
|
46,806
|
|
15,668
|
Freight and other
costs
|
88,697
|
|
88,361
|
Gross
revenues
|
432,665
|
|
383,350
|
|
|
|
|
Gross average realized
selling price (per dmt sold)
|
168.8
|
|
190.4
|
SOURCE Champion Iron Limited